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Education Department Sued Over Defrauded Borrowers

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Four plaintiffs who attended Corinthian Colleges programs are suing Secretary Betsy DeVos and the Department of Education in U.S. district court over a plan to award partial relief of student loan debt to borrowers defrauded or misled by their institutions.

The department in December announced plans to award relief of approved borrower defense to repayment claims based on the earnings of graduates who pursued a particular program of study at career education programs.

The Associated Press reported last week that students who attended Corinthian programs had begun receiving notices of specific award amounts.

The plaintiffs asked the court to order the Department of Education to grant complete loan relief to borrowers with approved claims and argued that its use of the earnings formula violates the Administrative Procedure Act and constitutes "arbitrary and capricious" rule making.

The plaintiffs are represented by Harvard Law School's Project on Predatory Student Lending and Housing and Economic Rights Advocates.